Elon Musk Won’t Produce Anymore Models After “Chip Hell” Revealed

(PresidentialInsider.com)- The semiconductor chip shortage is rearing its ugly head to Tesla, as the manufacturer of electric cars says it won’t be producing any new models this year.

On Wednesday, the Associated Press reported that Tesla was on pace to produce 50% more electric vehicles than the company was able to in 2021. However, the chip shortage across the globe means the company won’t have the ability to produce any new car models this year.

That includes the Cybertruck, which has been highly anticipated for a while now.

During an earnings call held January 26, the company’s CEO, Elon Musk, said Tesla’s factory output was limited throughout last year because of problems with the global supply chain. The fact that semiconductor chips were in such high demand forced Tesla to modify its manufacturing process and its line of vehicles to cope with the problem.

He also said that if the company were to build any new models, it would be forced to produce fewer vehicles overall, due to the time and resources that would be required for the factory retooling and engineering restructuring for the production process.

Musk also said that Tesla wouldn’t be working on a small electric vehicle that costs $25,000 for right now, but the company has plans to do that eventually.

The chip shortage is expected to affect the company’s production at least in the early part of this year. While announcing Tesla’s fourth-quarter earnings from 2021, Musk said:

“The rate of growth will depend on our equipment capacity, operational efficiency and the capacity and stability of the supply chain. Our own factories have been running below capacity for several quarters as supply chain became the main limiting factor, which is likely to continue through 2022.”

The company also expects to face overall higher expenses in 2022 due to increased costs due to the supply chain, as well as pressures from production and hikes in commodity prices.

This isn’t the first time Tesla has had to adjust due to the semiconductor shortage. It previously removed some electronic components in many of their vehicles that were produced for Australia, Asia and Europe.

In January, it was reported that one electronic component that was used for the advanced and hands-free steering capability was removed from many cars. Engineers for the company deemed that part redundant, since it was just being used for backup reasons, so they scrapped it.

As CNBC reported at the time, it was just one example of many ways in which Tesla had to cope with the shortage of semiconductor chips. Musk said the shortage was affecting even “basic chips … [including] the little chip that allows you to move your seat back and forth.”

It’s amazing that so much in our lives today is affected by semiconductor chips. The massive shortage isn’t just affecting the vehicle industry; it’s hit just about every aspect of technology in our lives.

And it’s another reason why American manufacturers are trying to see whether there are ways to make the U.S. less reliant on foreign chip makers.